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Carla Fried: Want another $100,000 or more for retirement? Follow this Social Security strategy

It's the rare household nearing retirement that doesn't have a few pangs of "will we be OK?" stress. Yet fewer than one in 10 retirees takes advantage of a Social Security strategy that locks in a big boost in lifetime retirement income.

A 55-year-old woman making $100,000 today who decides to wait until age 70 to start would collect a monthly benefit starting at around $3,380 – it will be adjusted for inflation – compared to $1,880 if she claims at age 62. Assuming average life expectancy, her lifetime benefit will be $1.1 million, compared to $790,000 if she starts at age 62.

For men, who don't live as long, the comparable numbers are $1 million for waiting compared to around $745,000 if he starts at age 62.

Even with getting checks for eight fewer years, Mr. Patience walks off with an extra quarter-million dollars. Monthly checks will be about 75% higher for those claiming at 70 than at 62.

In 2017, less than 6% of women and 4% of men waited until age 70 to start drawing Social Security. One third of beneficiaries started at age 62.

A recent analysis from a money-management firm, titled "The Retirement Solution Hiding in Plain Sight," estimates that too-early claiming costs American retirees a collective $3.4 trillion.

We're not hard-wired to want to wait. Among the behavioral biases that get in the way is our general aversion to delayed gratification. We also tend to "discount" actions that will only benefit us sometime in the future (delaying to age 70) when we can do something that feels good right now. There's also "loss aversion": the worry that if you wait, and then die early/earlier you will have lost out on what you could have collected.

Those biases aren't faults. The challenge is to acknowledge their existence and then work past them.

You probably should plan to live into your 90s

According to the Society of Actuaries, a 65-year-old male in average health has a 35% chance of living into his 90s; for a woman the probability is near 50%.

If you're in above-average health, the odds of living into your 90s are even higher. Of course, a medical condition you expect to shorten your lifespan may be reason to claim earlier. But move carefully. Married couples should always aim for the highest earner to delay to age 70.

Don't assume Social Security is going broke

If you're rolling your eyes at the delay strategy because you think Social Security is bound to reduce benefits before you reach age 70, take a deep breath. Social Security indeed has a cash-flow problem that needs to be addressed. But the history of the program is that when it institutes changes (reducing benefits slightly) it doesn't impose the new rules on people within 15 years or so of retirement. The most recent fix was in the 1980s.

The bonus for delaying is more than you can earn in risk-free bonds

Monthly benefit increases the Social Security promises you are guaranteed, and they add up. For instance, your full retirement age (FRA) is when you are eligible to collect 100% of your earned benefit. Anyone born in 1960 or later has an FRA of 67. If you claim at 62, your benefit will be 70% of your FRA benefit. If you wait until age 70 your benefit will be 124% of your FRA benefit.

Think you can do better claiming earlier and investing the money? Maybe. But the only way to pull that off is to take on investment risk. Ever since the financial crisis, the yield on the "risk-free" 10-year Treasury note has been stuck below 3%. That's a lot less than the roughly 5% annual boost you would get by delaying from age 62 to 67, and the 8% bump you get for each year you delay between 67 and 70.

You don't need to keep working full-bore

All you need to do is give yourself the flexibility to wait. Head over to the Social Security website and use its free retirement estimator, which will spit out the monthly benefit you will likely qualify for at age 62, at your FRA and at age 70. The estimate is based on your actual earnings over the years.

This year the average monthly benefit – across all claiming ages – is about $1,400 a month. Let's assume that might be the benefit you would be entitled to at age 62. So, if you delay, you essentially need to come up with $1,400 a month. Can you keep working at your career job? Great, you're probably set then. Or maybe all you need to do is work part-time to generate $1,400.

Another option is to begin taking withdrawals from your 401(k) and IRA savings. This can work to your advantage given that a conservatively invested retirement portfolio isn't likely to produce the annualized gains you will get from delaying your Social Security benefit. A financial planner can help figure this out.

If you don't have a financial adviser, you can try Garrett Planning Network. No endorsement implied. We mention them because they're fiduciaries, meaning they have to put your interests first, and they'll work on an hourly basis. Learn more about what to look for in hiring a certified financial planner.

Married? The high earner delays to age 70

By all means, consider both of you delaying as long as you can. But the key strategy is that the spouse with the highest benefit should absolutely delay, and it is less important when the other spouse starts.

Why? A surviving spouse is entitled to just one Social Security benefit: either his/her own benefit, or the benefit of the deceased spouse. That can be a serious cash-flow hit when a spouse dies. To ensure that the surviving spouse has the biggest possible benefit, you want to make sure that you maximized the benefit the highest wage earner is entitled to. That way, the survivor gets to choose the biggest possible benefit.

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